Kagan: Why is Verizon 5G Home struggling?

Why is Verizon struggling with their 5G Home service? Every wireless carrier wants to be first at something. So far, AT&T is first to 5G mobile and Verizon is first to 5G home. These are two different services. While AT&T is wireless, Verizon is home based. Both will be important going forward. If that’s the case, why then is Verizon struggling with theirs?

Verizon started their 5G Home service last October in a limited area. I consider this a test-market. They have not yet introduced their 5G wireless service yet.

When launched, the sense was 5G Home was Verizon’s way to get a jump on competitors by being able to claim they were first to this new marketplace, even though this was not a mobile service.

Now it seems their rush to be first may be backfiring on them.

5G confusion makes everything clear as mud

I know, it’s clear as mud, right? Welcome to the 5G marketing nightmare. The good news is this is very similar to the 4G marketing nightmare, and we ultimately made our way through that one.

The good news is I think we will have the same success with 5G. The bad news is that won’t be for a few more years.

However, 5G is very different from previous generations. They were all mobile only. 5G is mobile and home based and more. In fact, it will unleash incredible growth opportunities in many industries over the next several years.

AT&T’s problem was that their first generation 5G network was ready in several markets, but there were no 5G smartphones yet.

To solve this problem, AT&T partnered with Nighthawk on their LTE Mobile Hotspot Router. This router connects to the 5G network and through Wi-Fi connects to your smartphone. Bottom line, users can get 5G on a 4G device in the markets where this new technology is available.

AT&T uses Nighthawk LTE Mobile Hotspot Router to deliver 5G mobile today

I get the sense this router will be very popular with users for quite a long time. Even if the user upgrades their smartphone to 5G, they still have other devices like tablets and laptops. They can all benefit from the jump to 5G without trading up their devices.

So, with all that said, why is Verizon 5G Home having troubles? Apparently, the cost of all the parts of these new network is too high making a nationwide rollout difficult. So, it appears Verizon has a choice. They can either roll the service out, but not make money at this early stage. Or they can delay.

A young, vibrant, innovative competitor would do whatever it takes to win market share in this new industry. They would worry about being profitable later. What will Verizon do?

Every wireless carrier will eventually move into this space. They will all offer both 5G mobile and 5G home services. As a matter of fact, there will be plenty of other services used by businesses, self-driving cars, travel, etc.

This is much different than any other transition from 2G to 3G to 4G. They were all mobile only. That means 5G home and mobile will open the door to new competition for a variety of services like the connected home.

5G wireless pay TV is one new area that will challenge the TV industry

Example, it will create a new competitive business opportunity for pay TV. Today, pay TV providers are companies like AT&T DirecTV, Comcast Xfinity, Charter Spectrum and Altice. They deliver television over the Internet or cable TV.

Today we see these companies use wireless as part of their larger bundle creating a sticky-customer.

Going forward, wireless pay TV will continue to expand. Today, wireless pay TV is offered by AT&T DirecTV. T-Mobile says that’s the direction they are heading in as well.

I think that means we can expect Verizon Wireless and Sprint to follow. In addition, some of the cable television giants may enter wireless pay TV.

Plus, I expect newer and smaller competitors to enter this wireless pay TV space. The same way we have seen Amazon.com, Netflix, Hulu and others enter the IPTV and pay TV space.

5G will transform other industries with innovation

When we add 5G to the wireless pay TV model, this area is expected to explode with growth and innovation. That will challenge existing leaders. That’s why todays leaders will have to embrace this new technology as well.

This poses new challenges and new opportunities for growth and transformation. After all, innovation attracts customers. Companies who innovate, typically win. Companies who don’t, lose. It’s really that simple.

That’s why it’s important for Verizon to continue to roll out their 5G Home services. They may not make money for quite a while. However, they will win market share. That’s the way smaller and newer competitors play the game and ultimately win.

Important for Verizon to roll out 5G quickly, profitably or not

This is the way Verizon needs to play this game as well. 5G is an incredible innovation wave that will change everything, very quickly.

We’ve seen this kind of change before. You remember how the Apple iPhone and Google Android changed the smartphone market sending Nokia, Blackberry and Palm to the back of the line almost overnight.

This happened because none of these companies thought it could happen. Yet it did.

That’s why Verizon needs to think and act like a young, new and innovative player. Gain market share now and focus on profitability later. If they continue to act like a stodgy older company, the growth wave will pass them by and leave them behind and wondering what the heck just happened. It has happened before